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Date: 11/10/2010
Funding Remains Tight, Costly For Dubai Companies

Funding for companies in Dubai remains a challenge as banks continue taking provisions for bad loans, a Dubai Chamber of Commerce official said.

“Either it’s not available or if it is available, it’s too expensive,” Hamad Buamin, director general of the Dubai Chamber of Commerce & Industry, said in Dubai on Sunday. “The central bank looks at the numbers and says there is high liquidity but the problem is most of the banks are taking heavy provisions this year.”

Dubai borrowed $109.3 billion as it transformed itself into a financial, logistics and tourism hub, with about $15.5 billion of debt due this year, the International Monetary Fund estimates.

Some of Dubai’s state-owned companies have struggled to repay debt after the collapse of credit markets prevented them from raising new loans.

The deepest global financial crisis since the 1930s led to more than a 50 percent slump in Dubai property prices from their peak in August 2008, according to Colliers International estimates. Dubai borrowed about $20 billion last year from the U.A.E. government and Abu Dhabi, the United Arab Emirates capital, to help its state-owned firms.

“We are all in agreement that the real estate and construction sector will continue suffering this year and the financial sector locally will not be in a great position,” Buamin said.